£1.8m From New Apprentices in Daventry- Chris Heaton-Harris MP

Thursday, 13 March, 2014

Local News

New Apprentices give £1.8m boost to businesses in Daventry. I would like many more local businesses to take on an apprentice, after new research revealed the extent of the benefits involved.

Every time a local company hires an apprentice, their bottom line gets an average boost of £1,922. This happens immediately, while the apprentice is being trained, and represents the benefit after typical wage and training costs for the East Midlands are deducted.

Last year, 940 people started an apprenticeship in Daventry. This means that new apprentices alone provided a local boost of around £1,807,000 in 2012/13.

The number of apprentices has been increasing rapidly. Despite this, surveys show that 60% of small businesses are missing out because they don’t know enough about how apprenticeships work. Many assume that they are difficult to administer and will involve a short-term cost.

The new research was commissioned by AAT, which has pioneered apprenticeships in accounting. Non-traditional areas like accounting now make up the majority of apprenticeships, demonstrating the huge expansion in the range and types available.

The Chief Executive of AAT, Jane Scott Paul, welcomed the news: “I am delighted that Chris Heaton-Harris MP is encouraging more companies to employ an apprentice. Far from being a cost, apprentices bring benefits straight away. It’s really important that employers know there are apprenticeships for all shapes and sizes, including those in non-traditional sectors like accounting and law. That’s how apprentices boosted UK firms by £1.8 billion last year.”

The Prime Minister, David Cameron, said: “Delivering the best skills is a crucial part of our long-term economic plan for Britain. More apprenticeships mean more opportunities for young people, giving them financial security and Britain a better future.”

Commenting, Chris Heaton-Harris MP said: “If they don’t have one already, every local business in Daventry should consider employing an apprentice. By giving young people a chance, they will also be boosting their bottom line. The benefit here of £1.8m has made a real difference to the local economy, and that’s just from apprentices who began last year. Apprenticeship numbers have now doubled, with the Government making it a key priority. It’s great news for each local apprentice, great for our businesses and great for growth.”

Notes:

1. The research was produced for the Association of Accounting Technicians (AAT) by Cebr, with data on the net benefits for each region and each Parliamentary constituency in England. A report on the national findings was released on 28 February 2014. It is available on AAT’s website: www.aat.org.uk.

2. Cebr is an independent economics consultancy established in 1992 that provides macro and microeconomic research and advice to businesses across a range of sectors, including transport, energy, retail, property and information technology. Cebr undertakes quantitative research using a suite of computer-modelling tools and qualitative methods.

3. The gain to an employer of hiring an apprentice can be summarised as:

Employer gain = apprentice output + apprentice subsidies – apprentice wages – apprentice training costs

4. The average net benefit delivered by an apprentice varies according to the type of apprenticeship (which ranges from Team Leadership and Management to Hairdressing) and the level and related cost of training involved.

5. Cebr calculated the average organisational net benefit from hiring an apprentice in 2012/13 by estimating:

Average apprentice wages in 2012/13.
Average training costs in 2012/13.
Economic output produced by an apprentice in 2012/13.

6. To estimate apprentice wages Cebr drew on data in the 2011 and 2012 BIS Apprenticeship Pay Surveys. The wage rates have been uprated to give a 2012/13 figure. Cebr also used data in the 2012 BIS Apprenticeship Pay Survey on average contracted hours for apprentices.

7. The largest component of training costs is time spent by the employer providing on-the-job training. Cebr calculated these implicit time costs by using data in the ONS Annual Survey of Hours and Earnings (ASHE) on the wage costs of employees in different sectors/occupations in the economy.

8. Economic output for an apprentice has been estimated using both wage data in the ONS Annual Survey of Hours and Earnings and data on economic output and employment costs provided in the ONS Annual Business Survey (ABS). The ABS has enabled Cebr to estimate a relationship between economic output and employment costs in different sectors of the economy, including the economic output produced by an apprentice. Estimates have been adjusted to reflect the “productive capacity” of an apprentice – the extent to which an apprentice can replicate the tasks undertaken by a fully qualified worker. The productive capacity estimates have been based on existing research – in particular McIntosh (2007), “A Cost-Benefit Analysis of Apprenticeships and Other Vocational Qualifications”, Hogarth and Hasluck (2003), “Net Costs of Modern Apprenticeship Training to Employers” and Hogarth and Hasluck (2008), “The Net Benefit to Employer Investment in Apprenticeship Training”.